You’ve done all the preparations to get your business in great shape to sell. Now what? At this point, the most important choice you will make is whether to sell your business on your own or get professional help.
Selling Your Business Yourself
Selling a business is much more complex than selling a house. The value of a house is fairly easily determined. Not so for a business. Also, everyone knows your house is for sale when you put up your sign; but that’s the opposite of what you want when selling your business. If your employees, vendors, and customers know you are selling, you could lose key people and accounts, and your vendors may cut back on credit terms if they fear they may not get paid.
When selling a house, the due diligence usually entails a roof and termite inspection. With a business, however, you have to prove your income and expenses, negotiate a lease assignment, and deal with complex contracts.
If you don’t care who knows your business is for sale, you may be better off trying to sell it on your own. You can use listing services like Facebook Marketplace and look at some of the national websites that market businesses for sale. You may end up spending a few thousand dollars, but you could save more than that by not paying any commissions.
The problem with the do-it-yourself approach is that you will be asked to give away your confidential financial information to people who may not be qualified. Potential buyers will ask for your address so they can drop by, and they may ask your employees questions and otherwise interfere with your business operations. And just like a house that is for sale by owner, buyers are looking for bargains from business owners selling independently.
Finally, you’ll face many landmines that could blow up the deal once you agree on a price. Those include getting an asset purchase agreement with all the schedules signed, proving your numbers in a lengthy due diligence process, and assigning the real estate lease, to name a few.
Using a Broker to Sell Your Business
Most business owners hire a business broker to sell their business. You can find brokers on the internet, through the International Business Brokers Association or by referral from your accountant, attorney, or colleagues. Most business brokers charge fees starting at 15 percent and move lower as the price of the business goes up.
The first and foremost advantage of using a broker is confidentiality. A broker will market your business generically and require prospective buyers to sign a confidentiality form and show proof that they have the necessary funds to buy your business. This helps prevent the disruption of your business while it’s for sale.
You will also get the most money for your business if you have multiple prospects. Brokers market on a variety of websites, in the multiple listing services in their states, by direct mail and email, and through their various contact networks. With a larger pool of buyers, you stand a better chance of getting your business sold sooner and for more money.
Using a broker lets you continue to do what you do best, which is run your business. Many business owners take their eye off of business profitability while they try to sell it. The drop-off in business ultimately causes a drop in the value of the business.
Finally, getting from the point of finding a potential buyer to having a check in the bank is an arduous process that is fraught with potential points of failure. You’ll need all the help you can get to ensure a successful sale. Along with your accountant and attorney, your business broker will complete your dream team of professionals, all working together to help ensure a successful sale.
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